Reject Dissidents by Vodafone

Vodafone Group Plc investors backed company executives and rejected a plan by a money manager to spin off Vodafone's stake in Verizon Wireless and sell bonds to return cash to shareholders.

The four proposals made by Efficient Capital Structures were all rejected by more than 90 percent of shareholders at the company's annual meeting at the Queen Elizabeth II Conference Centre in London today. Newbury, England-based Vodafone, the world's biggest mobile-phone company, had opposed the plans.

The votes lend support to Vodafone Chief Executive Officer Arun Sarin, who last year faced opposition from investors representing 9.5 percent of shares voted. Sarin's focus on emerging markets, with acquisitions in India and Turkey, as well as cost cuts in developed countries helped Vodafone increase subscribers last quarter by 4.1 percent.

``It's good that management is under scrutiny,'' Philippe Kiewiet de Jonge, who holds Vodafone shares in a $150 million telecommunications fund at ABN Amro Asset Management, said before voting results were released. Efficient Capital is ``getting ahead of themselves. They are asking for too much.''

Vodafone shares fell 2.4 pence, or 1.5 percent, to 158.2 pence at 2:56 p.m. in London. The shares have risen 14 percent this year, making them the second-best performers in the 20- member Bloomberg Europe Telecommunication Service Index.

Different Views

``There is a complete coincidence of interest between ECS and the board,'' Vodafone Chairman John Bond told reporters after the meeting. ``We both want the stake to maximize the value for our shareholders. The differences of view are on the method.''

Efficient Capital, which holds about 200,000 Vodafone shares, last month proposed four resolutions it said would add 17 billion pounds ($35 billion) to 38 billion pounds of value.

The firm, which is backed by former Marconi Plc executive John Mayo, asked investors to vote to spin off Vodafone's 45 percent stake in U.S. mobile-phone carrier Verizon Wireless and to sell bonds. New York-based Verizon Communications Inc. owns the remaining 55 percent.

At the meeting, 93.2 percent of shareholders voted against spinning off the stake in Verizon Wireless, and 94.8 percent rejected a proposal to sell bonds.

ABN's Kiewiet de Jonge said Vodafone probably wants to hold onto the Verizon stake because the company expects a few more years of growth at the wireless carrier.

`Performing Well'

``I'm not sure asking Vodafone to sell Verizon is a good idea,'' he said. ``Verizon Wireless is still performing well.''

Sarin told reporters that Verizon Wireless's revenue and profits are ``still growing solid double digits''

``We're comfortable that we have a reasonable window where we can maximize the value,'' Sarin said today.

Efficient Capital Chairman Glenn Cooper, who said he met with 65 investors about the resolutions, said the efforts were a victory.

``We weren't really in the business of getting votes,'' Cooper said in an interview after the meeting. ``What we wanted to do is force change at Vodafone. The position on the Verizon Wireless stake will be dealt with over the next few months.'' He declined to explain how it will be dealt with or elaborate.

Efficient Capital's resolutions on the spinoff and bond sale required 50 percent support to be passed. The firm also put forward two special resolutions, which required 75 percent approval to be passed. One would have given shareholders the right to direct the board by means of an ordinary resolution. The other would have limited the company's ability to make acquisitions.

Company Rejection

Vodafone rejected all of Efficient Capital's proposals, saying they would undermine the company's ability to maximize the value in Verizon and to invest in the business.

Efficient Capital is owned by a group of investors including Mayo, Cooper and Rupert Darwall. Mayo's Beehive Capital LLP is a shareholder in Efficient Capital.

In April 2006, Sarin reorganized Vodafone into three units covering Europe, emerging markets and new technology. Sarin, 52, outlined a five-point strategy about two months later to reduce costs and increase growth.

As part of that strategy, Vodafone bought Turkey's Telsim Mobil Telekomunikasyon Hizmetleri AS for $4.55 billion in 2006 and bought a stake in India's Hutchison Essar Ltd. for $10.7 billion in May. The company added 3.3 million new subscribers in India and Turkey in the quarter ended in June.

In total, Vodafone added 9.1 million subscribers in the quarter, bringing the total to 232 million.

source:bloomberg.com